Transcript Strategy Formulation

Information System
Strategy
“Strategic planning has moved IS
from serving primarily as a support
function to a point where it may
influence corporate strategy”
Mary C. Jones 1995
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Ibrahim Elbeltagi
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Information Technology and
Corporate Strategy
• Why senior executives, Strategic planners,
and IS managers turning their attention to
opportunities for achieving competitive
advantage through IT?
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Information Technology and
Corporate Strategy
• There are several explanation for this trend:
 Publicity received by companies that have
gained significant advantage through IT.
 The unstable economic conditions for the last
years.
 IT offering array of capabilities with lower cost.
 Firms’ abilities to utilise the technology are
improving.
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Role of Information Systems
Strategy
• vital to continuing organisational
success and effective information
systems performance
• organisations still failing to deal
effectively with untangling IS
planning-related problems
• Why?
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Role of Information Systems
Strategy Cont.
• REASON=> many practitioners do not
seem to realise that the IS-related
problems result not merely from
technological problems but are also
derived from paying too little attention
to the interrelationship between IS
and business and organisational
factors
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Strategy formulation definition
• Strategy formulation is often referred to as
strategic planning or long-range planning
and is concerned with developing a
corporation’s mission, objectives,
strategies, and policies.
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Business planning processes
Mission &Objectives
Environmental Scanning
Formulation Strategy
Implementation
Evaluation & Control
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Business planning processes
• The mission statement describes the
company's business vision, including the
unchanging values and purpose of the firm
and forward-looking visionary goals that
guide the pursuit of future opportunities.
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Business planning processes
Situation Analysis
Internal Analysis
Strengths
External Analysis
Weaknesses
Opportunities
Threats
SWOT Profile
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Business planning processes
SWOT / TOWS Matrix
Opportunitie
s
Threats
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Strengths
Weaknesses
S-O
strategies
W-O
strategies
S-T
strategies
W-T
strategies
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Different approaches for
strategy formulation
The Boston consulting group business matrix: it is based on two precepts a
product life cycle and the relationship between market share and
profitability.
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Other planning/policy matrices
high
Industry
attractiveness
Invest
Niche?
Harvest
Select
x
Defend
Divest
Low
strong
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Competitive position
Ibrahim Elbeltagi
weak
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Competitive forces and
competitive strategies
Michael porter (1980) developed a model for
strategic choices in competitive
environments. The basis of the model is
that an enterprise exists within an industry
and to succeed, it must effectively deal
with the competitive forces that exist within
the particular industry.
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Potential New
Entrants
Threat of
new
entrants
Substitute
Products
from Other Threat of
Industries substitute
products
The Firm’s
Rivalry versus
Industry
Competition
Buyers
Bargaining
power of
buyers
Bargaining
power of
suppliers
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Suppliers
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Analysis of competitive forces to
identify IS/IT opportunity and threats
• How can IS/IT build barriers to entry?
• How can IS/IT build in switching costs for
customers?
• How can IS/IT change the basis of competition?
• How can IS/IT change the balance of power in
supplier/customer relationship?
• How can IS/IT generate new products and
services?
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Question
• Explain the impact of competitive forces
and potential IS/IT opportunities and its
relation with IS ethics?
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Generic business strategies
• Low cost strategy: requires the organisation to
identify the lowest cost approaches to the direct
activities of the business, minimise the
indirect/overhead expenses and provide
management with detailed reporting on all
aspects of fixed and variable cost incursion and
recovery.
• Differentiation strategy: the essential emphases
are innovation and creativity, market orientation
and people-driven rather than-driven
management controls.
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Generic business strategies
•
Niche/focus strategy: How can IS/IT help
in this strategy?
1.
2.
Identifying the target market, and / or
Developing a unique base of information about the
selected market and its needs, and / or
Establishing a specialist process via systems to
produce a clear cost advantage vis-à-vis general
market servers, and / or
Linking the organisation via systems into the business
of the customers to increase switching costs and
establish potential barriers to re-entry from general
market servers.
3.
4.
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Some concerns about the use
of planning tools and techniques
• Ethical concerns
• Strategic thinking as opposed to strategic
analysis
• The implications on IS/IT.
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